Obama to launch new enforcement action against China at WTO

Washington: US President Barack Obama will launch a new enforcement action against China at the WTO for illegally subsidising exports in its auto industries, a move seem as a reply to Republican presidential rival Mitt Romney's accusations that he has been soft towards Beijing.

During his visit to Columbus and Cincinnati in Ohio later today Obama would announce his move to launch an enforcement action against China at the WTO for illegally subsidising exports in their auto industries, a practice that is putting US auto parts manufacturers at a competitive disadvantage and that is encouraging the outsourcing of Chinese auto-parts, according to a White House official.

The administration is also today taking the next formal step in a WTO case launched in July against China's unfair imposition of duties on more than USD 3 billion in exports of US-made automobiles, officials said.

They said the Chinese duties cover more than 80 per cent US auto exports to China and disproportionately fall on General Motors and Chrysler products because of the actions that Obama took to support the US auto industry during the financial crisis.

"The key principle at stake is that China must play by the rules of the global trading system: When it does not, the Obama Administration will take action to ensure that American businesses and workers are competing on a level playing field," a White House official said.

According to the official, this action builds on Administration's record of strong trade enforcement to date.

"We have more than doubled the rate of trade cases against China compared to the prior Administration and took the first-ever safeguard action against a surge of Chinese tire imports," the official said.

Senior US officials allege that China is violating WTO prohibitions on export-contingent subsidies.

By providing a range of subsidies to auto and auto-parts producers directly linked to the firms' exports, China is not only violating WTO prohibitions on export-contingent subsidies, but also its own agreement to eliminate export subsidies when it joined the WTO in 2001, they said.

US estimate that China's illegal subsidies to auto and auto-parts exporters amounted to at least USD 1 billion between 2009 and 2011. These subsidies may benefit up to 60 per cent of Chinese auto-parts exports.

Officials here feel that China's export subsidy programme is hurting the US auto-parts industry and, specifically, US auto workers by contributing to the outsourcing of auto-parts production to China, not for sale into the Chinese market, but rather for export into the US and third markets and putting US auto-parts manufacturers at a competitive disadvantage precisely because we are playing by global trade rules.

Officials say this action aims to compel China to unwind its prohibited export subsidy programme and to help level the international playing field for US businesses and workers in the auto and auto parts industries.

Simultaneously, the United States will also announce that it is taking the next step in a WTO enforcement action launched in July over China's unfair imposition of antidumping and countervailing duties on approximately USD 3.3 billion in US automobile exports to China.

"Specifically, the administration is now positioned to formally request that the WTO form a dispute settlement panel to consider our case: Sixty days have now elapsed since we initiated consultations with the Chinese on this issue in early July," officials said, alleging that China unfairly imposed antidumping and countervailing duties on approximately USD 3.3 billion in US automobile exports to China.